Clint Dunaway, Author at Dunaway Law Group, PLC Page 17 of 19

Builders Risk Insurance

What is Builder’s Risk Insurance?

Builder’s risk insurance is a type of insurance policy which covers residential and commercial structures while they are under construction or being remodeled, or renovated. Builder’s risk insurance is “coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.”

Builder’s risk policies are typically available for three types of construction; ground-up new construction, remodeling and renovation.

What is Covered?

Builder’s risk is intended to protect construction sites from loss due to certain types of damage. The exact coverage and limitations varies between providers and policies but generally builder’s insurance will cover against loss from:

theft,
vandalism,
fire,
damage to equipment,

Additional coverage can be purchased to include protection from loss due to:

flood,
windstorm,
earthquake,
mudslides,
construction materials,
temporary structures,
fencing,
scaffolding and landscaping.

What is NOT Covered by Builder’s Risk Coverage?

terrorism,
acts of war,
government seizure,
nuclear hazards,
injuries or accidents on the job site,
damage to materials while they are in transit to the property.

If you are thinking about building a custom home in Arizona and have questions about builder’s risk insurance then call the Dunaway Law Group at 480-389-6529 or send us a message HERE.

What is a Deed of Trust

Arizona Deeds of Trust

To fully understand the meaning of the deed of trust, you must first understand promissory notes. Arizona home buyers often think of the deed of trust is the contract they are signing with the lender to borrow money to purchase their home. However, that’s actually not the case. It’s the promissory note that contains the promise to repay the amount borrowed.

While he promissory note is basically an IOU that contains the promise to repay the loan, the deed of trust is the document that pledges the property as security for the loan. It is the deed of trust that permits a bank to foreclose if you fail to make the monthly payments or breach the loan agreement in some other way.

Deeds of Trust

A deed of trust, pledges real property to secure a loan. In Arizona deeds of trust are used instead of a mortgage. A deed of trust involves three parties:

the trustor, aka, the borrower;
the lender, often referred to as the beneficiary in legal documents;
and the trustee. The trustee is an independent third-party that holds their poor legal title to the property. The main function of the trustee is to sell the property at public auction if the trustor defaults on payments. Quite often, an Arizona, a real estate lawyer asked as trustee.

Deed of Trust Foreclosure

The judicial foreclosure is the process used with deeds of trust. In a nonjudicial foreclosure, the bank can’t foreclose without going to court so long as the deed of trust contains a power of sale clause.

If you need help from an Arizona real estate attorney then contact the Dunaway Law Group at [email protected] or 480-389-6529

Material Breach of Lease

10-day Notice for Material Breach of the Lease Agreement

Section 33-1368(A) of the Arizona Residential Landlord and Tenant Act gives guidance to Arizona landlords whose tenants have materially breached their rental agreement.

Section 33-1368(A) states in part;

“…if there is a material noncompliance by the tenant with the rental agreement…the landlord may deliver a written notice to the tenant specifying the acts and omissions constituting the breach and that the rental agreement will terminate upon a date not less than ten days after receipt of the notice if the breach is not remedied in ten days.”
Section 33-1308(A)

Section 33-1368(A) goes on to say;

“…if the breach is remediable by repair or the payment of damages or otherwise, and the tenant adequately remedies the breach before the date specified in the notice, the rental agreement will not terminate.”
Section 33-1368(A)

So, for example, if a lease agreement provides for two adults to live in your property but you find that 22 adults are living in the property then this is the notice you will want to send them.

The Initial 10 day Notice. A 10-day Notice addresses specific breaches of the lease agreement. For instance it might read, “I know you’ve got 22 people living in the house and we’re giving you 10 days to get rid of the extra 20 tenants.” If your tenants do get rid of their 20 roommates during the following ten days then you are not able to evict them because they rectified the situation within the allotted time.

Second 10 day Notice. However, if your tenants remove the 20 extra roommates and they return after the 10 day notice expires then we can sent them a second 10 day notice and there is no way they can rectify the situation at that point.

If you, are an Arizona landlord with tenants in material breach of their lease agreement then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

* The information provided is informational only, does not constitute legal advice, and will not create an attorney-client or attorney-prospective client relationship. Additionally, the Dunaway Law Group, PLC limits its practice to the state of Arizona and New York.

Judgments and Credit Reports

power of judgments

Eviction judgments can be a powerful tool that dramatically increases the odds of a creditor collecting on the debt. A typical judgment will order the debtor to pay the amount awarded to the creditor, attorneys’ fees, court costs, and interest until paid in full. The Justice court jurisdictional limit is $10,000 (see A.R.S. 22-201), plus court costs (see Rule 139(d)) and attorneys’ fees (see Rule 139(d)).

After making a written demand for the awarded damages most people will not voluntarily pay. However, this is where the judgment itself can help an Arizona creditor recover their money.

A judgment can give creditors the power to garnish wages, levy bank accounts, or place liens on certain assets. Without the judgment all a creditor can do is beg for the money.

arizona evictions and credit reports

When a landlord obtains a judgment against someone, many people think it automatically go on their “record”, or credit report, but this isn’t always the case. The eviction judgment is a matter of public record, but the only way to guarantee that a judgment will show up on a credit report is to record the judgment with the relevant Arizona county. The eviction judgment will stay recorded until the debt is paid, it expires, or the debtor files bankruptcy.

In Arizona, most residential evictions occur in a Justice Court. In order to record the judgment with the county, a certified copy of the judgment must be sent to the Arizona Superior Court to receive a new case number. Once a Superior Court judgment has been established a certified copy can be recorded with the appropriate county. Each of these steps requires a filing fee–as of 2022–the total fees are just over $130.

A judgment will remain on the credit report until it is paid, or for as long as the judgment is valid. In Arizona, judgments are automatically valid for 10 years but can be renewed for another 10 years and another 10 years, etc. If the debt is paid in full, then the creditor must file a satisfaction of judgment with the county to demonstrate that the debt has been paid in full.

In summary, here are the main things to know when recording a judgment with the proper Arizona county.

The only way to ensure a judgment shows up on a credit report is to record it with the appropriate county recorder’s office.
If the judgment is paid in full, then the creditor MUST file a satisfaction of judgment with the court and then with the county recorder.
If not paid, the judgment will remain valid for 10 years, and an additional 10 years if it is renewed.

It is a common misconception that judgments automatically appear on a debtor’s credit report. However, this is not always the case. The judgment is a public record, and a diligent background checker will find it, but the only way to ensure the judgment appears on someone’s credit report is to record it with the county. Once this happens, it will appear on their credit report as a monetary judgment.

Ideally, a background check will reveal the eviction judgment even without it being recorded with the county. If you are a landlord, you should always perform background checks on prospective tenants.

However, for more everyday occurrences that don’t require a full-blown background check (like applying for a credit card or loan), having a blighted credit report can make life difficult.

satisfaction of judgment

Once a judgment debtor has satisfied a judgment, it is the creditor’s responsibility to file a satisfaction of judgment with with the relevant court. This will notify all interested parties that the debt has been paid in full.

If you need help from an Arizona real estate attorney, then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

Adding Rent and Damages to a Judgment

What options are available to Arizona landlords if they find new damage to their rental property after the tenants have been evicted? Rule 13(c)(2)(A) of the Eviction Action Rules of Procedures states that: “…if the plaintiff is entitled to rent incurred after the judgment has been entered, then the plaintiff may seek that amount in a separate civil action.”

Rule 13(c)(2)(E) of the Eviction Action Rules of Procedures indicates that damages can only be awarded if they were “…properly pled in the complaint and when such damages resulted from the breach giving rise to the eviction.”

filing civil lawsuit against former tenant

Rent or damages sought post-eviction judgment must be sought in a separate civil suit, rather than an eviction action. While an eviction judgment can be obtained in just a couple of weeks, a civil judgment takes much longer to get – usually several months.

However, if the damage to your property is extensive, and you believe you have a good chance of recovering the money from your tenant, then it can be worth the time and money it takes to pursue.

An Arizona landlord may sue a former tenant for damage to the property while they were living there. Cost of repairs that are above the normal wear and tear of tenants is recoverable. The security deposit is held in reserve to help off-set the cost of rehabilitating the property for new renters. However, after subtracting the deposit from the cost to rehab the property a landlord may decide to sue the former tenants for the full extent of damages sustained.

This highlights the importance of performing a thorough walk-through each time a tenant moves in or out of the property. Take very detailed notes, videos, and pictures of the property and note any damage. Give the tenants a copy of these records. Keep very detailed records of the cost to make the repairs. We must be able to prove to the court exactly how much it cost to repair the significant damage caused by a former tenant.

However, even if the tenant has vacated the property there is still an available remedy to try and seek a judgment against your former tenant. In this situation you may sue the former tenant under a breach of contract. The theory behind this is, a lawsuit existed (the lease agreement) and the contract was broken.

Unlike an eviction lawsuit, a civil lawsuit is very slow moving and the attorneys’ fees are much more expensive. Depending on many factors; whether the tenants counter-sue, hire legal counsel, are difficult to serve, and an extensive amount of discovery is required the typical case can range between 5 to 12 months! Much longer than the average 14 – 21 days required for a residential eviction.

does it make sense to file a new lawsuit?

In 99% of the instances, it does not make economic sense sue your former tenant through a breach of contract with a civil lawsuit. It’s just not worth the time, expense, and hassle of trying to get a judgment against them. Lastly, don’t forget, just because you actually obtain a judgment against your former tenant doesn’t mean that you’ll be able to collect on it. Often the judgment isn’t worth the paper it’s printed on.

If you need help from an Arizona real estate attorney, then contact the Dunaway Law Group at 480-389-6529 or message us HERE.